Conning: PPACA subsidies look inefficient

The Patient Protection and Affordable Care Act (PPACA) looks like an expensive vehicle for reducing the U.S. uninsured rate.

Analysts at Conning, an insurance investment and research firm, make that argument in a new report on the effects of PPACA on the U.S. commercial health insurance market.

Competing in the commercial health market has been complicated for insurers since January 2014, when the major PPACA coverage rules and coverage expansion programs came to life, the analysts say.

In the individual market, the analysts say, some of the best opportunities may be for Medicaid plan managers. Many low-income people slide back and forth between Medicaid coverage and PPACA exchange plans several times during the year, as their income levels change. Insurers that offer both types of plans can make the transitions easier, the analysts say.

In another section of the report, the analysts point out that the PPACA Medicaid expansion program, PPACA public exchange program and the PPACA Consumer Operated and Oriented Plan (CO-OP) program spent a total of about $177 billion on subsidies in 2014 and 2015.

The country started with 41.8 million uninsured people in 2013. The PPACA coverage expansion programs helped 8.8 million people get covered in 2014, and it helped a total of 12.8 million people get covered in 2015, the analysts say.

The PPACA programs spent an average of at least $685 on subsidies per newly insured life per month in 2014 and 2015, the analysts say. The monthly spending figure excludes PPACA exchange website costs and other program setup costs.

Medicare Advantage, in contrast, costs a total of about $700 per person per month, and employer-sponsored group health coverage costs an average of about $300 per person per month, the analysts say.

Policymakers may be more interested in listening to health insurers once they understand how high the cost of covering the newly insured has been, the analysts say.